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Table of Contents

Lead Story

Payments technology twists, turns, surprises


Industry Update

Fed puts payments in crosshairs

SEAA's welcome return to New Orleans

It's curtains for AmEx key fobs

Visa IPO largest in U.S. history

Interchange fuels ACH interest


GS Advisory Board:
Payments experts weigh in on Visa's IPO - Part II

Advanced functions and the future

Tracy Kitten


Tick tock: Time to comply with PCI

Biff Matthews
CardWare International


Street SmartsSM:
A passion to share

Jason Felts
Advanced Merchant Services

SAQ sun sets on smaller merchants

Michael Petitti

Make a plan to avoid failure

Jeff Fortney
Clearant LLC

Pinpointing compliance issues

David Mertz
Compliance Security Partners LLC

The pinch of PIN debit

Ken Musante
Humboldt Merchant Services

Search for talent made easier

Curt Hensley
CSH Consulting Inc.

Company Profile

Greystone Business Resources Corp.

New Products

Online friend in fraud fight

Company: Compliance Coach Inc.

Customer care for the little guys

InfoStreet Inc.


Destination: Sanity





Resource Guide


A Bigger Thing

The Green Sheet Online Edition

April 14, 2008  •  Issue 08:04:01

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Interchange fuels ACH interest

Merchants across the nation are trying to develop new ways to retain business and avoid interchange fees. MasterCard Worldwide recently revised its interchange rates; the fees continue to rise. Convenience store (c-store) merchants are coming up with creative ideas to get their customers to stop using credit and debit cards at the POS.

Gas stations offer incentives, such as discounted gas, to spur consumers to use loyalty cards or cash. But MTG Management Inc., with more than 50 gas stations in Austin, Texas, has taken the idea a step further with its new payments system that doesn't require swiping credit or debit cards, or paying with cash. Instead, consumers just need their driver's license.

The system, developed by National Payment Card LLC, is so attractive that people who sign up often make MTG their primary gasoline source and hardly use other forms of payment while at the station, said Guy Oliver, President of MTG.

Consumers who wish to use the system are required to sign up on National Payment Card's Web site, where they provide their checking account information as part of the registration process.

Subsequently, they can swipe the registered driver's license and enter a PIN on a keypad at the gas pump. Funds are immediately withdrawn from a consumer's account through the automated clearing house (ACH).

Oliver said he would rather his customers use ACH because it's less expensive than using credit and debit cards. And industry experts are noticing merchants shying away from bankcard payments.

"Merchants are looking for ways to reduce their interchange costs - particularly in this economy - and ACH is a fantastic way to do that," said Jeff Thorness, President of ACH Direct Inc. "It's the perfect combination of low cost and automation. Merchants in industries that are under extreme pricing pressure - like gasoline stations and airlines - are looking for ways to cut their costs and pass some of that along to their customers."

Still, Thorness hasn't seen a particular increase in ACH interest from other gas station owners or other retail merchants. "With merchants like that, you still have to have a card tied to a checking account," he said. "You really need the marriage of a card and an issuing bank."

ACH continues to dominate in the service industries, he added. "It is a more seamless experience for a service sector company - we get telecom, utilities, health clubs, anyone with recurring payments all the time."

ISO Wayne Akey of ACH Payments, agreed. "I work the most with merchants who have recurring payments," he said. "A dance studio that wants to bill 200 parents their monthly tuition automatically is a good example. I don't think there is a service sector industry that hasn't crossed my desk. But I am seeing more and more retail merchants."

Dee Karawadra, President and Chief Executive Officer of Impact PaySystems, said in spite of the lower transaction cost of ACH, he doesn't anticipate ACH really taking off at gas stations. "For an ordinary c-store owner, there is not going to be much more ACH can offer that check conversion doesn't.

"Most consumers this day and age depend on their credit and debit cards too much, and in their eyes, if the hassle is the same, why then should they worry about another PIN number?" Why, indeed.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | Simpay | USAePay | Impact Paysystems | Board Studios